Our research on insider trading activity has highlighted the fact that studies generally show a small outperformance effect for stocks bought by insiders (read our analysis of studies on insider trading). The theoretical explanation for this finding is that insiders already have an economic connection to the company, so in general it is rational for them to diversify their wealth; when the buy their company’s stock instead, it should tend to be due to high confidence in the company. Investors can therefore use insider purchases similarly to stock screens as ways to identify stocks which may prove to be worth a closer look. Read on for our quick take on five stocks which insiders have bought recently.

One stock where we recorded a recent insider purchase is Valeant Pharmaceuticals Intl Inc (NYSE:VRX). Valeant Pharmaceuticals Intl Inc (NYSE:VRX), a $33 billion market cap pharmaceutical company, reported more than a 30% increase in revenue last quarter compared to the second quarter of 2012. Markets have reacted positively to the company’s results, sending the stock up more than 60% in the last year even as pretax income has been negative year to date.

In addition to insider trading activity, we track quarterly 13F filings from hundreds of hedge funds and other notable investors. This is useful in our research on investment strategies; we have found, for example, that the most popular small cap stocks among hedge funds earn an average excess return of 18 percentage points per year and our own portfolio based on these results outperformed the S&P 500 by 33 percentage points since inception 11 months ago. Learn more about our small cap strategy. We can also use our database to track interest in individual stocks, and can see that billionaire Andreas Halvorsen’s Viking Global owned 9.5 million shares of Valeant Pharmaceuticals Intl Inc (NYSE:VRX) as of the end of June (see Halvorsen's stock picks).

Multiple Board members have been buying shares of Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR), which has roughly doubled so far in 2013. Billionaire David Einhorn of Greenlight Capital has publicly advocated shorting the stock, anticipating increased competition and falling margins (we’d note that it’s still down bit from his original short call), but recent reports show double-digit growth rates on both top and bottom lines. Investors are generally expecting high growth over the next several years, resulting in a trailing P/E of 30. A number of market players have joined Einhorn in shorting Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR), and so 38% of the float is held short.

Terex Corporation (NYSE:TEX), the manufacturer of aerial work platforms and other construction equipment, had an insider shift about 2,000 shares to her retirement account and add additional shares of the stock. Since demand for construction equipment is highly dependent on the overall economy, Terex is highly responsive to broader market conditions with a beta of 4.3. Business is down, but Wall Street analysts expect a rebound in earnings next year resulting in a forward P/E of 9. Billionaire David Tepper’s Appaloosa Management initiated a position in Terex between April and June (check out more stocks Tepper was buying).

The CEO of Marriott Vacations Worldwide Corp (NYSE:VAC), which manages Marriott’s vacation ownership assets, bought 3,000 shares of the stock in late August. Earnings per share have been on the rise at Marriott Vacations, with adjusted EPS for Q2 crushing analyst expectations and sales up 12% versus a year earlier. While trailing earnings are still low relative to the stock’s valuation, sell-side projections have the five-year PEG ratio below 1. SAC Capital Advisors, managed by billionaire Steve Cohen, reported owning about 670,000 shares in its most recent 13F (find Cohen's favorite stocks).

Finishing up our list of recent insider buys is an acquisition of 50,000 shares of TASER International, Inc. (NASDAQ:TASR). Taser has joined gun related stocks in a steep rise over the last year, more than doubling in price. In its most recent quarter, profits grew by close to 30% compared to the same period in the previous year stemming from both higher sales and wider margins. However, markets have already accounted for a good deal of future growth as shown by the fact that the trailing and forward P/Es are 41 and 32 respectively.